To Be Continued?

For the first time since November 1938, the biggest 26 U. S. life insurance companies--holders of 87 1/2% of the assets of all life companies--were free last week from the job of waiting on and helping SEC in its vast insurance study for the Temporary National Economic (monopoly) Committee. As far as TNEC was concerned the study had been completed. But for the big 26 there was still a question to decide. TNEC had offered to let them present further testimony on the probity of U. S. life insurance. Should they do so? Through last week officers of the big 26 went into huddle after huddle, at week's end were still undecided what to do.

The monumental study of the big 26 prepared by SEC Economist Ernest J. Howe had showed that the big 26 own 11.6% of the Federal debt, hold better than a tenth of the mortgage on U. S. private industry, 17.4% of the mortgage on U. S. railroads (TIME, Feb. 26). It also showed that they had been more astute in investments than any other big financial group, grounded the fair conclusion that policyholders had suffered less in depression than bank depositors, brokers' customers, stockholders of investment trusts. Toward the close of the hearing last fortnight, SEC's grey-haired young inquisitor, Gerhard Gesell, showed however, that the record of insurance companies beyond the control of such strict States as New York and Massachusetts had been something less than perfect.

Between 1929 and 1938, 19 smaller insurance companies, most of them under the control of Middle Western States, went to the wall and initial indicated losses to policyholders totaled $130,000,000. Famed Insurance Statistician Alfred

M. Best, devout defender of the well-run insurance companies, attributed most of the crashes to bad investment judgment, rather than skulduggery. But he was able to point a striking contrast: during the period when 19 small insurance companies were failing, 14,000 banks great and small also crashed and indicated initial loss to their depositors was $3,500,000,000.

As impressed as anyone by this comparative record was SEC's Leon Henderson whom Business has come to regard as its foe. No one was more astounded than insurancemen when Commissioner Henderson broke in on Statistician Best's testimony to point and dramatize the Best statistics.

"I think that is an extraordinary record as far as the integrity of insurance assets are concerned," said he. ". . . It is an amazing record as far as investment policy is concerned." Pleased but not disarmed as the hearing ended, U. S. insurance still had reason to fear that the TNEC study may still be the basis for a bill to put the business under Federal control, not at this session of Congress when the SEC has its hands full with its investment trust bill, but perhaps in 1941.

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